An unseemly amount of time has passed since I discussed the on/off rules for this system. As they say - "Life is what happens while you are making other plans!"
So let's get stuck into the rest of the plan and start making trades.
Assuming our system is turned on we need a universe and a buy rule. For this exercise my universe is all ASX stocks priced between 20 cents and 10 dollars where the 20 day moving average of value traded is above $500,000. I take that list about once a month and immediately remove anything not in a decent up trend.
When will I be buying?
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chart courtesy of www.IncredibleCharts.com
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Remembering that I once said "If your universe of stocks are all in an uptrend you can just about buy randomly and trail a stop". It therefore follows that I don't believe in getting too complicated with buy criteria. Quite simply I'm looking for a dip in the RSI followed by a volatility breakout then I will buy the next open PROVIDED THE RISK IS LESS THAN 10% OF THE OPENING PRICE.
Next... Exits
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